Jones Soda pulls off a Seahawks upset

Scrappy Seattle firm beats out Coke for soft-drink rights at Qwest Field

By CRAIG HARRIS, P-I REPORTER

Published 10:00 pm, Wednesday, May 23, 2007

Say goodbye to a Coke and a smile at Seahawks games.

And say hello to a Jones Soda and a player to be named later.

Jones Soda Co., a small, scrappy Seattle-based firm, has sacked beverage titan Coca-Cola to acquire the soft-drink rights at Qwest Field and its Event Center for the next five years, according to a securities filing.

Peter van Stolk, Jones Soda's chief executive, told the Seattle P-I on Wednesday that his company will sell fountain drinks and sodas in plastic bottles throughout Qwest Field, and canned soft drinks in suites. The bottles will feature pictures of Seahawks players.

Financial terms were not disclosed, and it's unknown how much Jones Soda paid for a sponsorship.

It is the first time a small private label has knocked off a largesoft-drink company to win a major pouring contract, according to one beverage analyst. Jones Soda also becomes the only label outside of cola giants Coke and Pepsi to have an exclusive deal with an NFL team.

"It's exciting. It shows we have the confidence of the Seahawks and their management team that we can deliver. We feel very comfortable. We will create an opportunity for them and exceed their expectations," van Stolk said in a phone interview.

A key in getting the deal, van Stolk said, was a patent the company owns that allows Jones Soda to place individual photos on the labels of its bottles.

The company already puts thousands of pictures of its customers on bottles, and Jones Soda will place different players or fans on plastic bottles inside Qwest Field and on glass bottles in supermarkets that carry the drinks, he said.

"We want to create something for the fan base. We will have players on the bottles. It will be like a series and almost like trading cards," van Stolk said.

Jones Soda, which currently has 21 flavors, will sell at least six flavors at Qwest Field, including a new cola, diet cola and lemon-lime drink at Seahawks games, van Stolk said.

The company also produces a water beverage, a ready-to-drink organic tea, non-carbonated juice and tea, and an energy drink called WhoopAss. Jones Soda has the right to sell "other non-alcoholic beverages" at the stadium, but it hasn't decided which products it will sell.

The agreement runs from July 1 to Feb. 28, 2012, according to the securities filing. Jones Soda also becomes a team sponsor, and the company is allowed to use the trademarks of the Seattle Seahawks.

The deal helped push shares of Jones Soda up 8 percent to close at $21.64 Wednesday on the Nasdaq stock market.

Suzanne Lavender, a Seahawks spokeswoman, said the team and Jones Soda would provide additional details at a media conference in June.

Susan Stribling, a spokeswoman for Atlanta-based Coca-Cola North America, said the company "couldn't reach an agreement that worked for both of us" and decided not to continue the relationship with the Seahawks. Stribling also said Coke's Dasani water brand won't be available at Qwest Field.

Coke said it had the soft-drink pouring rights for the Seahawks from 1977 to 1998 and from 2002 until this year. Pepsi had the pouring rights from 1998-2001.

Elite company

The deal puts Jones Soda, which launched in January 1996 with six sodas, in the elite company of Coke and Pepsi, which together control the soft-drink pouring rights at the NFL's other 31 stadiums.

Coke is in 17 stadiums, while Pepsi is in the remaining 14 and has a tie-in with the NFL, according to Beverage Digest, a trade publication.

"These stadium deals are very valuable for presence and brand awareness," said John Sicher, who has covered the beverage industry for 13 years and is editor of the trade publication. "It's an interesting deal."

Coke and Pepsi also control a combined 74 percent of the $70 billion beverage market, according to Beverage Digest. Jones Soda, with just 90 employees, is among myriad private-label companies that collectively make up 1.5 percent of the market.

Nicole Miller Regan, a beverage analyst with Piper Jaffray & Co., said Jones Soda is the first private label beverage company to beat a major soft-drink brand for a venue such as Qwest Field.

Regan also said the deal will benefit retailers that sell Jones Soda because they will be able to sell bottles with the team logo and Seahawks players, who are immensely popular.

However, NFL rules will limit Jones Soda to selling Seahawks-related products within the state of Washington, said Brian McCarthy, an NFL spokesman.

McCarthy said Jones Soda's desire to associate with the Seahawks, who played in the Super Bowl in 2006, "reflects the power of an NFL franchise to attract a wide range of sponsors."

"The Seahawks are one of the more aggressive clubs in mining potential sponsorship deals and this is an example of that," McCarthy said. "They (Seahawks) are always on the lookout for new ways to enhance the club's value and, at the same time, its exposure."

Even with the restrictions, one beverage analyst was impressed that Jones Soda pulled off the deal. But with just 10 guaranteed home football games per season, James Maher, an analyst with ThinkEquity Partners of San Francisco, said it's not a large revenue producer for Jones Soda.

"But it's a good opportunity to establish a connection from what has been a smaller brand with America's most popular spectator sport," Maher said.

Jones Soda had $39 million in sales last year and made $4.57 million in profits.

Tony Eggink, who was visiting Seattle from Elkhart, Ind., said he was thrilled when told his favorite soft-drink company had the Seahawks deal.

"That's pretty cool. I prefer a Jones Soda to Coke any day," said Eggink, who drinks one Jones Soda a day.

But Gordie Hanrahan, a Seattle resident who has attended Seahawks games, said it's not a big deal for him.

"I don't care what kind of soda they have," Hanrahan said. "If I'm going to have a soda, I'm going to have a soda."

Latest score

The Qwest Field contract is the latest big score for Jones Soda, which this year has moved onto the shelves of major supermarkets such as Wal-Mart, Kmart, Fred Meyer and Safeway following a deal with National Beverage Co.

Previously, Jones Soda had an exclusive deal to be in Target. That deal expired Dec. 31, but Target still carries Jones Soda.

To get a marketing edge, Jones Soda this year also began sweetening its drinks with pure cane sugar instead of using high fructose corn syrup, which is in many soft drinks.

Until this year, Jones Soda had received most of its attention for making quirky drinks such as Turkey & Gravy soda as part of its Thanksgiving packs. During its formative years, the company marketed itself to the extreme sports crowd, and it has used an X-Game gold medalist and a surfer to pitch its products.

Van Stolk said getting the Seahawks deal is just another move for an ever-expanding company.

"Our job is to introduce Jones to fans who haven't tried it, and make it a fun experience," van Stolk said. "We are going to convert the cola drinkers to Jones Soda. And our cola will be amazing. You will have pure cane sugar on tap."